Thank you, Madam Chair, and good morning, everyone.
I have been studying ISDS for many years, maybe 20 years, and I have some simple advice for you today: Canada should adopt the perspective of quiet determination to withdraw from its ISDS risks and costs where possible and whenever possible.
Let me elaborate a little. The context, obviously, is that we're in the midst of a crisis, a global pandemic. That crisis has revealed the vulnerabilities and possibly the limits of our era of globalization. We have a lack of vaccine manufacturing capacity. We have a lack of other manufacturing capacity in Canada and in North America. To give you one anecdotal example, an electrician told me I was lucky to be able to get a breaker for my electrical panel a couple of months ago. There's only one factory producing them in North America, and it was shut down by an outbreak in the summer.
Besides the pandemic and what it's revealed in terms of vulnerabilities, we have all kinds of complex risks coming at us—environmental challenges, climate disruption, rising debt burdens, economic inequality, loss of jobs and businesses, and the rise of political extremism. In this context, I would suggest, while not wishing to be sensationalist at all, that we need to prepare for the prospect of some winding down, or further winding down, of the globalization era of the last 30 years or so. It certainly has dominated my adult life, this era. I'm not sure if the winding down will be gradual or sporadic or jolting, but I think it would be wise for us to think about planning for some sort of winding down.
That means a shift in strategy more to a national capacity, likely with more of a North American regional orientation as opposed to a global orientation. Global markets will still always be vitally important, but we need to have some kind of robust plan B to deal with changing circumstances and the crises yet to come, whether they are public health-related, environmental, financial or economic. To do that, we need to strengthen the regulatory manoeuvring space and governmental capacity in Canada, nationally and subnationally. To do that, we have to free ourselves from ISDS risks and costs. This is a different order of risk and cost compared with all other forms of adjudication, whether international or otherwise. There are potentially billions at risk, with a huge deterrent impact on governmental decision-making. I've been documenting that for years in various countries.
ISDS creates this really difficult-to-justify shift in bargaining power within governmental decision-making. I would say it's even leading to a kind of reconfiguration of the state, the governing apparatus of the state, in favour of foreign investors and against anyone in Canada who has a different interest on any issue. There are also long-standing issues in ISDS about this underlying taint of the process because of the extraordinary power of lawyers sitting as arbitrators to interpret vague language in the treaties in order to order retrospective damages amounts running into potentially billions of dollars against states. The process is not independent. It's not fair. It's not balanced. It's also not respectful to domestic institutions. Those criticisms have been out there for a long time.
Basically, in summary, with ISDS treaties we've been writing cheques that have an unknown amount on them. Where it says the amount, this cheque is blank. It's to be determined by very wealthy foreign investors and by the lawyers and arbitrators who interpret the treaties in the event of a claim by one of those foreign investors, usually big multinational entities or billionaires.
ISDS treaties haven't cost us catastrophically yet. There have been very serious impacts in the context of some other countries, but I think it's just a matter of time. As we respond to challenges and crises in the future, eventually ISDS treaties are going to cost us. They're going to hamper us more and complicate and deter our efforts to protect Canadian interests. ISDS treaties will do the same to other countries, too. I think, broadly speaking, we want those other countries to have national capacity to respond to crises as well.
How should we respond? Very briefly, we need to retain and strengthen governmental capacity and flexibility and strengthen our domestic institutions based on Canadian law that protects all investors and based on the customary approach to international law and relations between states and foreign nationals, a customary approach that frankly has been departed from dramatically and, at times, simply mangled by ISDS arbitrators over the last 20 years or so.
ISDS is the clearest and riskiest obstacle from a legal point of view to building this governmental capacity going forward. That's why my advice is fairly simple: withdraw from ISDS.
There are various ISDS reform efforts, but in summary, they're sort of scattered, painfully slow, generally flagging or not that promising. That's why I say develop a strategy of withdrawal from ISDS however possible. We have a window to let the clock tick down on existing ISDS treaty commitments, and we should start taking advantage of it now. I'm not trying to be provocative or inflexible about how we withdraw; I would just say to prioritize it. The tactics will depend on the particular treaty in which we already have ISDS commitments, but we really need to take ourselves on this path, in my view.
Very briefly, in summary, I've heard a lot of arguments for ISDS treaties. I understand what is at stake for Canadian companies operating abroad. I understand that alternatives to treaty-based ISDS are viable, but they're certainly not perfect. In my judgment, however, ISDS treaties are just not worth the national loss and future constraints in any context where we've agreed to ISDS, and so we need this attitude of quiet determination to get out and, in the meantime, otherwise limit ISDS risks as best we can.
Thank you.